December, 2022
• For the three months ended 31 December 2022, Capital Group Global High Income Opportunities Hedged (AU) returned 6.3%4 before fees, while the index returned 5.3%. 5 Net of fees, the fund returned 6.1%. 6 Over a one-year period, the fund returned -12.7%4 before fees and -13.4%6 after fees, compared to the index’s return of -13.8%5 .
• All four sectors that GHIO invests in – EM hard currency sovereign bonds, EM local currency sovereign bonds, EM corporate bonds and corporate high-yield (HY) bonds – rebounded to deliver positive total returns in the fourth quarter. This was mostly the result of a fall in bond yields driven by market expectations that inflation might have peaked enabling central banks to ease policy during 2023.
• Within EM local currency sovereign bonds, positions in South Africa and Ukraine were both notable contributors to results. After contracting during Q2, South Africa’s GDP rebounded strongly during Q3.
• The markets positioning for a slowing global economy and less aggressive interest rate hikes fed through to a weakening of the US dollar over the quarter. This in turn helped support hard currency EM. The largest contribution to results was the fund’s holdings in an Argentinian bond. The strong return helping to pare losses from previous quarters. News around the 2023 elections has created volatility in the Argentine bond market and this is likely to remain the case at least until the second quarter of the year when there should be some insight into candidates and coalitions.
• Within corporate HY, all sectors made a positive contribution to fund results. The highest contribution came from the consumer sectors, both cyclical and non-cyclical. Other notable contributions to the portfolios total returns included energy, capital goods and technology
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Commentary-CGGHIOHAU-q-4.pdfNovember, 2022
For the month ended 30 November 2022, Capital Group Global High Income Opportunities Hedged (AU) returned 4.8%2 , while the index returned 4.2%3 . Net of fees, the fund returned 4.7%4 . For the 12-month period, the fund returned -11.4%2 before fees, and -12.1% after fees4 , compared with the index’s return of -12.7%3 .
• EM bonds had the largest positive impact on the portfolio’s absolute returns over the month. EM hard currency government and agency bonds contributed the most, particularly holdings in Argentina and Egypt. EM local currency nominal government bonds also had a positive impact on absolute returns, led by South Africa and Ukraine, although positions in Russia and Brazil detracted. Holdings of EM corporate bonds added absolute value too, most notably in the basic industry sector where petrochemical company Braskem Idesa was a key contributor. In contrast, EM local currency inflation-linked bonds had little impact on overall absolute results.
• High yield corporate bonds also contributed on an absolute basis. The consumer cyclical sector was the largest contributor on an absolute basis, particularly a holding in Melco Resorts. The consumer non-cyclical sector also contributed to absolute returns, with a position in Teva Pharmaceutical among the largest contributors. While no sectors detracted on an absolute basis, party goods supplier Party City was the largest detractor at a security level.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Commentary-CGGHIOHAU-m-1.pdfSeptember, 2022
• For the three months ended 30 September 2022, Capital Group Global High Income Opportunities Hedged (AU) returned -2.5%4 before fees, while the index returned -2.9%. 5 Net of fees, the fund returned -2.7%. 6 Over a one-year period, the fund returned -17.9%4 before fees and -18.6%6 after fees, compared to the index’s return of -18.5%5 .
• All four sectors that GHIO primarily invests in – EM hard currency sovereign bonds, EM local currency sovereign bonds, EM corporate bonds and corporate high-yield bonds – delivered negative total returns in the third quarter, driving down GHIO’s results. This was mostly driven by the increase in government bond yields as major developed market central banks continued to tighten monetary policy. EM currency weakness weighed on EM local currency debt, against a backdrop of broad US dollar strength over the period.
• Within EM local currency sovereign bonds, positions in South Africa and Colombia detracted. The South African rand weakened over the quarter. The South African Reserve Bank has been proactively raising interest rates, despite relatively contained core inflation, partly to help stem the weakness in the rand.
• Within EM hard currency sovereign and agency bonds, a position in Argentine bonds weighed on the portfolio’s absolute returns. The main sources of volatility remain the election in Argentina next year and the current government’s compliance with the International Monetary Fund programme. Holdings in Mexico also detracted amid high inflation, declining business confidence and softer non-manufacturing PMI. The central bank continued to tighten monetary policy over the quarter and revised its growth projections downwards.
• Both hard and local currency Russian bond holdings were marked higher over the quarter, which had a beneficial impact.
• Within corporate high yield, transportation and communications holdings delivered larger than average negative total returns, which weighed on the portfolio’s total returns. Meanwhile the energy sector had a positive impact.
June, 2022
For the three months ended 30 June 2022, Capital Group Global High Income Opportunities Hedged (AU) returned -10.0%4 before fees, while the index returned -9.9%. 5 Net of fees, the fund returned -10.2%. 6 Over a one-year period, the fund returned -15.8%4 before fees and -16.5%6 after fees, compared to the index’s return of -16.3%.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Commentary-CGGHIOHAU-q-2.pdfMarch, 2022
For the three months ended 31 March 2022, Capital Group Global High Income Opportunities Hedged (AU) returned -6.4% before fees, in line with the index return. Net of fees, the fund returned -6.6%. Over a oneyear period, the fund returned -3.4% before fees and -4.2% after fees, compared to the index’s return of -4.3%.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Commentary-CGGHIOHAU-q-1.pdfAugust, 2021
• For the month ended 31 August 2021, Capital Group Global High Income Opportunities Hedged (AU) returned 0.9%2 while the index returned 0.7%3 Net of fees, the fund returned 0.9%4 For the 12-month period, the fund returned 8.4%2 before fees, and 7.4% after fees4 compared with the index’s return of 6.8%3
• Emerging market (EM) bonds had a beneficial impact on the portfolio’s absolute returns. The main positive contribution came from hard-currency government bonds and agency bonds, particularly Argentina and, to a lesser extent, Mexico; in contrast, Sri Lanka had a negative impact on the portfolio’s absolute returns. EM Localcurrency government bonds also had a beneficial impact on the portfolio’s absolute returns over the month: Indonesia, Colombia, Malaysia and South Africa were the main positives, while Mexico slightly detracted. EM corporate bonds and local-currency inflation-linked bonds both delivered marginally positive absolute contributions.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Commentary-CGGHIOHAU-m.pdfDecember, 2020
For the three months ended 31 December 2020, Capital Group Global High Income Opportunities Hedged (AU) returned 7.5%4 before fees, while the index returned 6.4%.5 Net of fees, the fund returned 7.3%.6 Over a one-year period, the fund returned 8.4%4 before fees and 7.5%6 after fees, compared to the index’s return of 4.0%5.
Areas that helped the portfolio in Q4:
- Mexican local currency and hard currency sovereign bonds Mexican local currency bonds offer relatively high real yields, scope for policy easing, and a well-supported currency. Meanwhile, the hard currency bonds have been supported by an improving external outlook, helped by US fiscal stimulus and hopes for a vaccine.
- Indonesian local currency sovereign bonds The Indonesian rupiah appreciated almost 6% relative to the US dollar over the quarter, helping returns for the local currency bonds. Subdued inflation should continue to provide support to Indonesian local currency bonds.
Areas that hurt the portfolio in Q4:
- Argentine hard currency sovereign bonds Argentina defaulted on its sovereign debt repayments in 2020, resulting in capital outflows. It has also been suffering from double-digit inflation, a weak fiscal position and the impact of the COVID-19 lockdown.
- Frontier Communications (integrated telecom services) The heavily indebted US telecoms group entered Chapter 11 in early 2020, but is widely expected to exit from that early in 2021. The company owns significant fibre assets across the US and our analyst sees potential for growth in that area as well as scope for meaningful de-leveraging.
asset_class: Fixed Income
asset_category: High Yield Credit
peer_benchmark: Fixed Income - High Yield Credit Index
broad_market_index: Global High Yield Credit Hdg Index
manager_contact_details: Array
ticker: CIM3839AU
release_schedule: Quarterly
commentary_block: Array
factsheet_url:
https://www.capitalgroup.com/adviser/au/en/fund-centre.AU60CIM38399.html
Right sidebar -> Quarterly Fund Commentary
fund_features:
Capital Group Global High Income Opportunities Hedged (AU) aims to achieve over the long-term, a high level of total return, of which a large component is current income by investing in emerging market government bonds and corporate high yield bonds from around the world, while limiting exposure to currencies other than A$ through passive hedging. To achieve over the long term, a high level of total return, of which a large component is current income by investing in emerging market government bonds and corporate high yield bonds from around the world, while limiting exposure to currencies other than A$ through passive hedging.
structure: Managed Fund